As mobile payment heats up, Google and Apple plan to revamp their services

Google will launch a new Android Pay system and revamp its Google Wallet application while Apple will update its Apple Pay system, the Times's report says. Here, Google employees wait to check in conferencegoers at the Moscone Center in San Francisco on May 27, 2015.

Since the introduction of the iPhone 6 last year, most new smart phones now have the hardware to perform mobile payments. But for years, the technology failed to catch on in the US. Store owners didn’t have terminals that supported tapping a phone to pay for goods, and most smart phone owners preferred the tried-and-tried credit card to paying digitally.

But mobile payment is finally catching on as customers warm to the idea, and as more stores add compatible check-out terminals. And according to a report from The New York Times, both Google and Apple are planning to announce major updates to their mobile payment platforms in an effort to grab a bigger slice of the digital-transactions pie.

At its annual Google I/O developer conference, which kicks off on Thursday, Google is expected to announce Android Pay, a new service that will let retailers accept credit card payments from mobile apps. Android Pay will also integrate with retail loyalty programs, allowing customers to earn points from mobile transactions.

Google will also reintroduce its Google Wallet program, which was launched back in 2011 to allow smart phone users to pay by tapping their Android devices on terminals in stores. Google Wallet struggled to catch on, but this year, it’s coming pre-installed on compatible new Verizon, AT&T, and T-Mobile phones. Google may rework the Wallet app to allow person-to-person transactions, so one user could pay another straight from his or her debit account, the Times’ report said, citing three people familiar with the situation.

For its part, Apple is expected to announce changes to its competing Apple Pay platform at the World Wide Developer Conference (WWDC) next month, the Times’ report said. Those updates will include a rewards program for using mobile payments, which has been missing from the service so far.

Apple wants to make mobile payments more attractive to entice more people to use the iPhone (and the Apple Watch), whereas Google wants to coax more smart phone users into its ecosystem of interconnected apps and services. To be sure, there are other mobile payment companies out there, including PayPal, which is pushing a suite of payment apps, and start-up companies such as Square, which became famous for its petite credit card reader that plugs directly into a smart phone. But for now, the nascent mobile payment market is dominated by Google and Apple.